Lawyer Gets 3 Years In Pension Fraud

February 19, 1988|By William B. Crawford Jr.

A lawyer convicted of helping loot the $741,000 pension fund of a Naperville firm was sentenced to three years in prison Thursday by a federal judge who said he never before had a case involving such massive fraud.

William Goodstein, 74, an Evanston resident, was found guilty on Dec. 7 of plotting with two other men to cheat 50 longtime employees of Du Page Boiler Works in Naperville out of their pensions after eliminating their jobs by bankrupting the company.

The scheme involved buying the firm primarily to get control of its pension fund, then declaring bankruptcy and going out of business.

``It was hard to sit here and listen to the plight of these poor, innocent victims who worked for this firm for years, paid their bills on time and, in a very short time, found their dreams shattered,`` said Judge Charles Kocoras in imposing the prison sentence.

Although Kocoras acknowledged that Goodstein`s assets are far less than the amount taken from the pension fund, he also ordered him to use what assets he has to make restitution to the workers.

A second defendant, Jack Eberwein, 56, former president of Du Page Boiler, who pleaded guilty earlier and testified at Goodstein`s trial, was sentenced to 60 days in a federal correctional center in Ohio, where he now lives. Eberwein was ordered to pay $1,000 restitution.

A third person, the alleged mastermind of the scheme, Morton Scherl, 50, formerly of Northbrook, is a fugitive. He disappeared in October, 1986, after he was briefly taken into custody for making death threats against witnesses in the grand jury investigation of the pension fraud.

Scherl, who used the alias Robert Caldwell, was indicted by the grand jury May 20 along with Goodstein and Eberwein on charges of violating federal laws that bar company officers from using pension funds for their own use.

According to the indictment and evidence at the trial, Scherl and Goodstein bought Du Page Boiler, a 60-year-old maker of pressurized tanks in late 1984. The seller was Clyde Savage, co-founder the firm with his brother, Richard, who had died the year before.

The purchase price was provided by Paine Co., a deeply-in-debt Chicago metal faster company of which Scherl and Goodstein had gained control in 1983. At Du Page Boiler, Scherl became chairman and trustee of the pension fund, Eberwein president, and Goodstein secretary-treasurer.

Evidence presented by Joan B. Safford, deputy chief of the U.S. attorney`s criminal division, and coprosecutor William Hogan indicated that Scherl and Goodstein paid $350,000 in Paine Co. debts with Du Page Boiler pension money and converted the rest of the pension fund to their own use.

The Tribune in late 1986 disclosed how, under Scherl`s management, Du Page Boiler also became a conduit for up to $2.5 million in funds taken from several other Midwest companies with which he had dealings.

During the trial, Hogan said that when Savage sold his interest, Du Page Boiler had $500,000 in the bank, $600,000 in receivables and a pension fund worth $741,000.

Hogan said that only about $2,400 was left when the company closed two years later.

Several former Du Page Boiler employees testified that when pension payments stopped in 1986, Goodstein wrote letters and made ``lulling``

telephone calls assuring them that their pensions were safe.

Alvin Hagerman, 61, a former employee, testified that despite the assurances, he lost all but $4,000 of the $27,000 he had accumulated in the fund.

A lawyer for June Savage, widow of company co-founder Richard Savage, testified that she lost nearly $94,000 in retirement funds.

In a bid for leniency, defense lawyer Michael Nash portrayed Goodstein as a victim of Scherl.

He said Goodstein was ``in the the twilight of his years stripped of his license to practice law and embarrassed in the eyes of his wife of 45 years and his friends`` and is living off Social Security.

``Scherl came into this town a fugitive and negotiated upward of 30 different deals with people from all walks of life and he fooled them all, including Mr. Goodstein,`` Nash said.

Records show that Scherl was convicted of using false names to obtain credit cards in San Francisco in 1968 and of mail fraud in New York in 1975.

He also is sought in Massachusetts for arson and insurance fraud after a plane owned by one of his companies was set afire. He was indicted in New York City in a scheme to defraud a bank and is being sought in Florida on suspicion of looting a dry goods company of its assets.